Source: Impact PR
New OECD data shows NZ’s economy will take more than 30 years to double in size unless major structural and cultural changes are made to how organisations operate.
The modelling shows New Zealand’s real GDP, currently at US$216 billion, is not expected to double until 2055.[1]
While the nation’s economy is projected to grow by nearly 48% by 2040, this expansion is largely driven by population growth and increased labour input, rather than meaningful improvements in productivity.
New Zealand’s GDP per hour worked, once comparable to Scandinavian countries like Denmark, Finland, and Sweden, is now on average 40% lower than those economies. This long-term underperformance highlights the depth of NZ’s productivity challenge and signals a widening gap not just in economic output, but in living standards, wage potential and long-term competitiveness.[2]
Experts say that the rapid adoption of AI will not be enough on its own to reverse this trend and significantly boost productivity. Despite the transformative potential of AI and automation, they say that without a simultaneous shift in how organisations lead, structure and empower their people, the implementation of new technology risks amplifying the structural inefficiencies holding back productivity gains.
Craig Steel, a workplace performance expert from Vantaset and author of Transforming New Zealand’s Productivity, says the country has overestimated what technology alone can deliver without first building the leadership capability and workplace culture needed to make those tools effective.
“There’s a misguided belief that AI will close the gap for any organisation that applies it. But what we’ve seen is that when organisations adopt technology without modernising their leadership and culture, the gains they were seeking rarely occur
“If AI is layered on top of disconnected leadership models and compliance-based systems, it won’t lift people, it will marginalise them,” he says.
Steel warns that New Zealand is at risk of becoming a two-speed economy, where a small number of digitally advanced sectors pull ahead while the rest fall further behind.
“AI will benefit some industries more than others. High-tech services, finance and digital commerce are naturally positioned to leverage AI quickly. But for our traditional sectors like construction, agriculture, tourism and logistics, the path to impact is slower, more convoluted and more dependent on leadership clarity and workforce capability.”
Steel says that this uneven adoption is already starting to show as tech-savvy organisations begin to accelerate.
“You’re seeing early gains in digitally native firms that have agile structures and strong investment in talent. Meanwhile, labour-intensive sectors are struggling to adapt their business models, and without support, they’ll be left behind.”
Steel says the real barrier isn’t technology itself, but the lack of modern systems and the leadership needed to make it work.
“Despite the hype, AI’s promise of efficiency is often delayed by years of integration, upskilling and business model adaptation. In New Zealand, many small and mid-sized firms lack the scale or leadership frameworks to carry that burden effectively.
“OECD research shows that digital adoption only translates to higher productivity when it’s coupled with managerial capability, workforce training and capital investment. New Zealand firms consistently underperform in all three. Without a cultural and strategic reset, AI risks becoming just another cost with limited return,” he says.
Steel says technology must enhance human capability, not just replace it.
He says organisations that use AI to support clarity, autonomy and purposeful work are far more likely to see sustained productivity gains. When AI is implemented simply to reduce workforce size or centralise control, it can backfire – weakening morale, diminishing trust and stalling innovation.
“The opportunity with AI isn’t automation for its own sake, it’s augmentation – giving people better tools so they can make a bigger difference,” says Steel.
Steel says there are five interdependent drivers of performance: strategy, culture, leadership, capability and performance management.
He says his research shows that organisations consistently fail not because they lack data or technology, but because they fail to align these drivers.
Steel has worked with hundreds of organisations over the past 30 years, including some of New Zealand’s largest exporters across sectors such as agriculture, manufacturing, transport, infrastructure and financial services. He says the common thread among high-performing organisations is not scale or sector, but clarity and conviction.
“Regardless of industry, when people understand the strategy, see how they contribute, and are trusted to make decisions, performance improves. That doesn’t happen by accident; it happens by design.
“New Zealand businesses are at a crossroads. The current economic environment, shaped by global volatility, rapid technological disruption, and the changing nature of work, demands an entirely new approach to organisational performance.”
Darren Shand, former All Blacks manager and now delivery partner to Vantaset says New Zealand must look to the systems that underpin its sporting success.
“The All Blacks didn’t win because of tools. They won because of belief, clarity and discipline.
“Every player knew their role, how they contributed and how to excel under pressure. That same clarity is missing from many organisations right now.”
Shand draws a stark comparison between elite teams and underperforming industries.
“A factory floor is no different from a forward pack. If you have great individuals but no connection to purpose or feedback loops, performance breaks down. AI won’t fix that – systems, leadership and culture will.”
The OECD has further warned that rising energy costs, minimal R&D spending, and fragmented digital leadership are eroding New Zealand’s competitiveness just as other economies accelerate their investment in integrated performance systems.
Shand says the solution is not to discard AI, but to reposition it.
“You can’t fix a performance problem by swapping people for algorithms. You fix it by creating an environment where AI supports human decision-making, where strategy is clear and where people are trusted to lead.”
Shand says the message from elite sport is simple: adapt your model, not just the tools.
“In rugby, if you’re behind on the scoreboard, you don’t wait for momentum to shift. You change tactics. That’s what New Zealand needs now. A new playbook, not just a new platform”, he says.
MIL OSI
